Sitharaman also increased the limit of Emergency Credit Line Guarantee Scheme (ECLGS) to INR 4.5 Lakh Cr from the existing INR 3 Lakh Cr
Out of INR 1.1 Lakh Cr, INR 50,000 Cr has been allocated for the health sector and rest INR 60,000 Cr for rest of the sectors
New policy will be formulated for appraisal and approval of PPP proposals and monetisation of core infrastructure assets, including through InvITs, says FM
The Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman addressing a Press Conference, in New Delhi on June 28, 2021.
Responding to the popular demands which startups and MSMEs had raised after last year’s INR 20 Lakh Cr package, the finance minister Nirmala Sitharaman has now announced a credit guarantee scheme worth INR 1.1 Lakh Crore for Covid-affected sectors.
Addressing a press conference, the finance minister said,
“We are announcing about eight economic relief measures, of which four are absolutely new and one is specific to health infrastructure. For Covid-affected areas, INR 1.1 lakh crore credit guarantee scheme and INR 50,000 crores for the health sector.”
Besides, Sitharaman also increased the limit of Emergency Credit Line Guarantee Scheme (ECLGS) to INR 4.5 Lakh Cr from the existing INR 3 Lakh Cr that was launched as a part of Atma Nirbhar Bharat Package in 2020.
The ECLGS offered banks and NBFCs complete guarantee in meeting the massive credit requirements of MSMEs. ECLGS-1.0, 2.0 and 3.0 have so far resulted in credit disbursal of INR 2.69 lakh Cr to 1.1 Cr borrowers by 12 public sector banks, 25 private sector banks, and 31 NBFCs.
Commenting on the announcement, Shachindra Nath, executive chairman & MD, U GRO Capital said that considering the fact that almost 90% of the Emergency Credit Line Guarantee Scheme (ECLGS) outlay was effectively utilized to support the affected MSME sector, an additional INR 1.5 Lakh Cr will greatly catalyse the revival as well as growth processes of the MSMEs. “Further, credit guarantee scheme for 25 Lakh individuals through the micro-finance institutions and the financial measures announced for the tourism sector is much appreciated. With the economy carefully opening up in stages, the announced measures will certainly prove viable for the MSMEs and individuals towards their efforts to overhaul the broken cash-flows,” he added.
Finance minister also announced INR 50,000 Cr support for the healthcare sector. This aims to upscale medical infrastructure targeting underserved areas and provides guarantee cover for expansion and new projects related to health/medical infrastructure in cities other than 8 metropolitan cities. The guarantee provided by National Credit Guarantee Trustee Company Limited covers 50% for expansion & 75% for new projects. The interest rate has been capped at 7.95%.
Welcoming the INR 50,000 Cr package for the healthcare sector, Ashok Patel, CEO & founder of Max Ventilator said, “Recently, we have all been helpless witness to our limited healthcare infrastructure struggling to cope with the needs of Covid patients especially during the second Covid phase. Keeping this in mind and in view of the Covid-driven economic slowdown, this is a much-needed respite for the healthcare infrastructure as well as the broader economy.”
Seconding this, Siddharth Rastogi, executive director of MVS Engineering said that Investment in modern equipment, including on-site oxygen gas generation systems, can be a costly affair. Hospitals and nursing homes in urban and semi-urban India will benefit from direct financial support measures provided by the Government. Reliable supply of oxygen through an on-site oxygen generator will alleviate the woes experienced all over India during the ongoing second wave and provide independence to hospitals for years to come.
Other announcements made by the finance minister include:
- INR 60,000 Cr For Other Sectors: Here, the interest rate has been capped at 8.25%.
- Additional INR 1.5 lakh Cr for Emergency Credit Line Guarantee Scheme (ECLGS)
- Credit Guarantee Scheme to facilitate loans to 25 Lakh persons through Micro Finance Institutions (MFIs): Guarantee will be provided to Scheduled Commercial Banks for loans to new or existing NBFC-MFIs or MFIs for on lending upto INR 1.25 lakh to approximately 25 lakh small borrowers
- Financial support to more than 11,000 registered tourist guides/travel and tourism stakeholders
- Free tourist visa to 5 lakh tourists
- Proposed to infuse equity in ECGC over 5 years to boost export insurance cover by INR 88,000 Cr
- Additional INR 19,041 Cr for BharatNet
- Tenure of PLI Scheme for Large Scale Electronics Manufacturing is proposed to be extended by one year i.e. till 2025-26
At the conference, the finance minister also announced plans to formulate a new policy for appraisal and approval of PPP proposals and monetisation of core infrastructure assets, including through InvITs (Infrastructure Investment Trusts).
